Can somebody please help me understand this. I sold my shares the day BO was announced for 6.60 as I was one if those who didn't get the gist of CVR. Was hoping it would jump when trading resumed and seeing it dropping sold it.
1). Will it be gainful if I were to repurchase now. Am I right that the 6.44 is not guaranteed for me as I bought after the BO date close .
2) if in 90 days share price is a guaranteed 6.44 which is when the buying company would acquire the stock. So meanwhile will the price drop and even if it drops who will sell for less than an assured 6.44. And if the price is down then new buyers like me would buy those shares as I know the value is at least 6.44 even if that guarantee is not applicable for me as I bought later. So what can shorts do to cover at a lower price.
I don't know if I did a right thing by selling off but if it is not too late and if I get a clarity on risk involved may get back in. Again we got peanuts with this BO. Otherwise I would not be even asking expert opinions if I should
You can still buy. Although I didn't sell my shares, I am tempted to buy more because it would be a safe and solid investment with a net chance to really purchase shares of CHTP at $0.15 with a chance to collect ten times $1.50 over 3 years.
@reality90210, Very nicely put. To me, this is buying opportunity anywhere near 6:50 range or hold.
For folks considering selling and trying to get back later, It only makes sense if you have other investment where you can buy/sell with higher profits and then when you get back in CHTP to hold shares on last trading day, you are expecting prices to remain flat.......I am not that smart to evaluate the opportunity costs with high level of certainty, hence, I am holding my CHTP shares.
Also note that today you pay $.15 premium for $1.50 in future. As time goes by towards merger culmination, This premium most likely will go higher.
@newbee. The buyout price of $6.44 is set. The holders of shares on day buyout closes will surrender their shares and receive $6.44 per share cash in their accounts. At same time, the brokerages will hold the number of shares one owned into a holding account as escrow. In future, CVR payments will be deposited in the accounts based on that.
You can reenter and buy at any price before buyout closes. You are correct that the price will not drop too much and should flatline around $6.44 plus some more to account for future CVR present value. Market forces will keep the supply demand. Current small premium of 14 cents over $6.44 basically is people willing to pay extra for right to get $1.50 over two years or so.There should be no more shorts, no heavy buying or selling here on out. Volume should remain low. The trading will be mostly folks selling to cash out and folks buying to tap into additional 20% upside coupons
Of course, all this can change if CHTP receives another offer but basically, you are risk free and guaranteed $6.44 plus future payments as long as you own CHTP shares on day of merger closures.
I respectfully disagree that the volume will remain low. In fact, I think there will be a buying surge when we get closer to the closing of this buyout. This is basically free money with almost no risk.
Thanks ricemba for clearing this up. I'm one of those "if its too good to be true...people" so the scenario you posed sounds too good. Where is the risk then? I could by 100,000 shares now and wait to collect my 20%. If CHTP does not sell even one bottle, what's the worst case scenario? DO I stand to lose nothing? Am I missing something? Thanks in advance ricemba